v3.26.1
Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

2. Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, U.S. government-backed securities with maturity dates up to one year, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities.

 

Money market funds included in cash and cash equivalents and U.S. government-backed securities are measured at fair value based on quoted prices in active markets, which are considered Level 1 inputs.

 

The warrant liability is measured at fair value using the Black-Scholes options pricing model. The fair value is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs.

 

The Company’s investment in shares of AlloTera Therapeutics common stock and the related contingent liability are classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The fair value of these instruments is estimated using a combination of valuation techniques, including an adjusted enterprise valuation method and a backsolve method, which incorporates information from recent financing transactions and the Company’s assessment of the underlying enterprise value of AlloTera Therapeutics.

 

Significant unobservable inputs used in these valuations include assumptions related to the enterprise value of AlloTera Therapeutics, discounts for lack of marketability, the capital structure of the investee, and the probability and timing of potential liquidity events. The valuation of the contingent liability is based on assumptions that are consistent with those used in valuing the related AlloTera Therapeutics investment, including the expected distribution of proceeds upon a liquidity event.

 

The Company remeasures the fair value of the contingent liability at each reporting date, with changes in fair value recognized in earnings. The fair value of the AlloTera Therapeutics investment is also reassessed each reporting period based on updated assumptions and available market information.

 

There were no material changes in the valuation techniques or significant unobservable inputs used to measure these Level 3 instruments during the three months ended March 31, 2026.

 

 

The following table presents the Company’s assets and liabilities which were measured at fair value at December 31, 2025 and March 31, 2026:

 

 Schedule of Fair Value of Financial Instruments

                 
   At December 31, 2025: 
   Level 1   Level 2   Level 3   Total 
Assets:                
Money market funds  $1,607,009   $—   $—   $1,607,009 
Investment   —    —    1,326,329    1,326,329 
Liabilities:                    
Contingent liability   —    —    (692,531)   (692,531)
Total  $1,607,009   $—   $633,798   $2,240,807 

 

                 
   At March 31, 2026: 
   Level 1   Level 2   Level 3   Total 
Assets:                
Money market funds  $831,700   $—   $—   $831,700 
Investment   —    —    1,326,329    1,326,329 
Liabilities:                    
Warrant liability   —    —    (928,435)   (928,435)
Contingent liability   —    —    (692,531)   (692,531)
Total  $831,700   $—   $(294,637)  $537,063